Scams - Chain Letters

Chain letters, regardless of their purpose, ie: whether to produce money for the person who sends them or to bring good luck, are illegal in Canada in any form. When there is no exchange of a tangible product or service but the participants are expected to send money, it is known as a pyramid scheme, which is a direct violation of the Competition Act. In addition, chain letters give the recipient the false impression that they will be receiving money or good luck and health.

The name "chain letter" comes from their method of operation. All the participants in the scheme form a chain. If one of the participants does not send on the letter, the chain is broken, and there are no returns to you or others in the chain. Invariably the participants on the "end of the chain" are the ones that lose their money.

Chain letters appear on an infrequent basis and the appeal is varied. For example, since the fall of 1991, the Bureau has been aware of a chain letter with a different twist. Frequently the name Edward L. Greene appears somewhere in the letter, with a testimonial by Sharon Vanderburg. She states that she is 27 years old and has made 375,885 dollars in only three months. The letter invites you to join a Multi-Level Sales Program. The instructions for this one are extremely complex.

You are given step by step instructions and are told it is simple, legal, and that it is not a pyramid scheme or a chain letter. These statements are not true. The letter tells you to:

1. Create a company name. The basis of this idea is that the individual participants will not be located by the authorities.

2. Rent a mailbox. The idea is not to burden your letter carrier, however, the implication is that the response will be extremely heavy. Additionally, personal street addresses are not normally used by participants, in hopes of avoiding prosecution.

3. Send for four report forms from four names and addresses included in the package and enclose five dollars for each four.

4. Retype the name list on the "required reports" page in the package, replacing your company name and address for the first one on the list. Then that name is to be moved down to the second position, the next name is moved to the third position, and the third name is moved to the fourth position; forming the chain.

5. Prepare a mailing list and make copies of the original package you received. Send out the letter you received and when you receive the four reports you copy them and send them on as you get the requests with the 5 dollars.

Again, consumers should be reminded that chain letters are illegal in Canada in any form, and anyone who participates in them is in violation of the law.